US Bank imposes mortgage layoffs | SkipLeadPro

By Ashraful Islam Updated July 19, 2023 Reviewed by Ashraful Islam
Photo Credit: BiggerPockets
Photo: HousingWire

Minneapolis-based U.S. Bank, the fourth-largest U.S. mortgage lender, is laying off staffers in its mortgage division this week, a spokesperson confirmed on Tuesday. 

The announcement follows a decline in its mortgage originations in the first quarter of 2023 – the second-quarter earnings will be released on Wednesday morning.

The current jobs cut also comes amid rumors that depositary lenders would see changes to their residential mortgage capital requirements under the Basel III regulations.  

“At U.S. Bank, we make decisions that position us well for today’s market and in the future,” a spokesperson told HousingWire. “As a result, we have made the difficult decision to reduce resources in certain roles aligned to areas of the business that continue to slow – while investing in others where we see growth potential.” 

The spokesperson did not provide further details, such as the number of employees affected. Inside Mortgage Finance first reported news of the layoffs.   

U.S. Bank, owned by U.S. Bancorp, was number four among mortgage originators in the U.S. in the first quarter of 2023, according to IMF estimates.

However, mortgage volume has been in free fall at the bank amid surging rates. The bank’s total mortgage origination volume reached $9.6 billion from January to March, down 41.7% year over year.

The bank tries to maintain a balanced portfolio between retail and correspondent lending. From January to March, the bank originated a $4.47 billion volume in the retail channel and $5.8 billion through the correspondent channel, per IMF estimates.  

U.S. Bank would be affected by new residential mortgage capital requirements under the Basel III rules, which are expected to be released on July 27, according to a Bloomberg report. Under the latest draft proposal, risk weights of 40% to 90% would be assigned for large banks, depending on the loan-to-value ratio. The current rule sets a 50% risk weight on most first-lien residential mortgages.

The bank announced in December 2022 that it would close the wholesale mortgage businesses it inherited in the acquisition of California-based MUFG Union Bank

U.S. Bank closed the acquisition of MUFG’s core regional banking franchise from Japan-based Mitsubishi UFJ Financial Group at the beginning of December 2022, adding 1 million consumers and about 190,000 small business customers on the West Coast. 

The spokesperson said the layoffs are “not related to or specific to Union Bank.”

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